It's a given that most of us try to be as efficient as possible when it comes to our daily routines. Whether it's doing the dishes or driving the kids to school, we usually take the route that makes the most sense. The accounting for your business should be no different.
You may save money throughout the year by handling your bookkeeping on an Excel document or a series of post-it notes, but at some point, you'll have to get everything reconciled for tax time, let alone if you decide to sell the business.
Ideally, you'd want to review the numbers at least once a month to make informed decisions about how the business is faring. If there's a lag on the compilation of all these transactions, chances are you'll be making decisions blindfolded. Needless to say, this method may save a few dollars each month, but it certainly doesn't save time or contribute to accurate data.
Narrowing it down
Of course, it all depends on what industry you're in and whether you need industry-specific software. For example, we've worked with Maverick Paints, a Detroit-based paint distributor, and they started off using QuickBooks Commerce, which at the time was a relatively new venture for Intuit. QB Commerce had purchased another company headquartered in Singapore that specialized in warehousing and inventory management software. Unfortunately, the software didn't work as needed and they tried Odoo, which has functionality for what Maverick needed, however, it was too complex for the team needed, and too expensive on a monthly basis. They ended up settling on Square for their POS and QBO for their accounting software. We implemented both and continue to manage their weekly transactions to keep them on track and growing. The point is, almost every aspect of the business is automated, from online orders to daily bookkeeping. The technology matters.
Another such case study involved a commercial construction company that was still using Excel to send out bids, invoice, and schedule projects. We advised, based on the size of the company, to go with an out-of-the-box solution called Jobber for their project management and payments solution. Then we got them on QuickBooks Online to review their monthly P&Ls and cash balances. We imported their client database, subcontractors, and prior projects to make sure the cost codes were in line with prior jobs. When they hired internal staff, we advised them to get setup on ADP with time tracker to ensure their labor costs were being monitored accurately.
Yes, there are costs to this. Costs associated with the software, the set up, and the review of such systems. However, they save money in time, additional labor (i.e. they don't need to hire an internal accountant or controller), and they get data which is far more accurate and streamlined than before.
Being highly selective
There are a plethora of options out there for accounting solutions. Xero and Freshbooks compete with Intuit for small to medium-sized businesses. Add ons like Bill.com and Ramp.com can be interfaced with QBO to create automated AP for the company. There's also no shortage of accountants out there who are remote that can help with all of the ins and outs of selection, implementation and training, and ongoing support.
Business owners need to be highly selective when choosing both the software and the support though. If you mess it up, it can be very costly to change, re-train, and pivot in another direction. We're not saying it can't be done or that mistakes don't happen with these sorts of things, but attention needs to be paid to the client's needs from the outset. Otherwise, frustration and unnecessary costs will occur and the relationship will be strained from the get go. Some businesses tend to require boots on the ground too, from an advisory standpoint. For example, if you're running a construction business, it's probably necessary that your accountant is close by to meet weekly or monthly. If you're running an online writing course, that probably isn't necessary.
In short, as with everything else these days from ChatGPT to Instagram, technology is changing the way we live and work. This is no different with accounting and tax services. Pay close attention to those firms that embrace this technology to make your life easier, and steer clear of those that resist these new and efficient ways of doing business.